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DEPARTMENT OF ENERGY

PRESENTATION ON THE

INTEGRATED NATIONAL ELECTRFICATION PROGRAM (INEP)

18 JUNE 2013

Annual Report Presentation1. Introduction2. Key focus areas3. Allocation 13/14 financial year 4. Universal access challenges5. Additional progress6. Way forward

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Introduction

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INEP’s response to the 12 Government Outcomes and PICC

INEP contributes to the following DoE and Government’s Outcomes Based Planning Approach:

Outcome 4 – Decent employment through inclusive economic growth;

Outcome 6 – An efficient, competitive and responsive economic infrastructure network

Outcome 7 – Vibrant, equitable and sustainable rural communities with food security for all

Outcome 8 – Sustainable human settlement and improved quality of household life and

Outcome 9 – A responsive, accountable, effective and efficient local government system.

INEP is also reporting into SIP 6 of the PICC process.

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Key Focus Areas for 2012/13

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• Over 5.6 million households were connected to the grid between 1994 and 2012/13.

• In period 2002 to 2012/13 - 65 174 households were supplied with non-grid technology (Solar panels – Renewable Energy)

• Eastern Cape - 12,282• Kwazulu Natal - 43,511• Limpopo - 9,381

Electrification progress

•Non-grid electrification programmes will in future not only be implemented in concessionary areas, but in a limited basis in other areas in country.

Province

Electrified Houses:

Municipalities & Eskom

Eastern Cape 1 010 986Free State 365 537Gauteng 665 815KwaZulu Natal 914 277Limpopo 982 537Mpumalanga 539 556

Northern Cape 132 584North West 654 767Western Cape 382 716

Total 5 648 775

MUNIC PROGRAMME 2012/13 – PERFORMANCE APRIL 2013

PROVINCE ALLOCATION R’000

TRANSFERRED R ‘000

EXPENDITURE R’000

PLANNED CONNECTIONS

CONNECTIONS ACHIEVED

YTD Actual Connections INCLUDING ROLLOVERS

EC R 279,400 270,420 116,591 16494 2996 7601

FS R 79,300 69,300 24,495 3827 932 3258

GP R 168,000 188,000 91,328 7859 3874 6216

KZN R 234,000 240,000 38,270 16491 549 4684

LIM R 125,300 132,500 64,330 13078 4843 10255

MP R 74,943 75,823 31,527 5931 2248 5390

NW R 49,300 43,300 11,677 3852 546 4292

NC R 59,900 60,800 32,019 3590 887 2892

WC R 61,300 71,300 39,646 2725 2401 6032

TOTAL R 1,151,443 1,151,443 449,883 73 847 19 276 50 620

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ESKOM PROGRAMME 2012/13– PERFORMANCE APRIL 2013

PROVINCE ALLOCATION TRANSFERED EXPENDITURE PLANNED CONNECTIONS

CONNECTIONS ACHIEVED

YTD Actual Connections INCLUDING ROLLOVERS

EC R488,340,000 R488,340,000 R 398,287,779 22,227 17151 21480

FS R39,118,000 R39,118,000 R 22,590,440

2,815 3326 3559

GP R104,882,000 R104,882,000 R 86,620,958

9,568 9688 12843

KZN R510,292,000 R510,292,000 R 527,353,057

26,111 17963 20653

LIM R233,028,000 R233,028,000 R 175,898,147

22,198 23553 26812

MP R108,566,000 R108,566,000 R 85,843,897

9,385 10568 12082

NW R246,988,000 R246,988,000 R 123,921,150

12,779 10516 12062

NC R36,108,000 R36,108,000 R 14,871,096

1,338 1511 1643

WC R110,046,000 R110,046,000 R 68,879,182

7,803 8618 9907

TOTAL R1,879,368,000

R1,879,368,000

R 1,504,265,708 114,224 102894 121041

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TOTAL ALLOCATION

R’000

Planned Connections

Total Expenditure to date R’000

Connections Achieved to

Date

R 86 400 13 310 R 58 327 9 343

Non grid – Solar home systems

2012/13 Financial year

Electrification data of 12/13 still to be added – more connections will be added, need to verify some connections.

Target of 180 000 was exceeded Improved efficiencies as a result of be more involved in the operational

activities of implementers.

Good co-operation from Eskom and Municipalities

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INEP PERFORMANCE (12/13)

Entity MTEF Allocations

Connections INEP (including

roll-overs)

Connections Own funding

Total Connections

Eskom (bn) R 1,879 368 121 041 21 831 142 872Municipalities (bn) R 1,151 443 50 620 50 620Non-grid (mil) R 86 400 9 343 9 343Total R 3,117,211 181 004 21 831 202 835

Allocations 13/14 Financial year

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Allocations 2013/142013/14

R’000

MUNICIPALITIES 1,314,772

PLANNED CONNECTIONS 103,864

ESKOM (NATIONAL) 2,141,027

PLANNED CONNECTIONS 157,839

NON - GRID 91,150

PLANNED CONNECTIONS 15 000

TOTAL PLANNED CONNECTIONS

276 703*

TOTAL ALLOCATIONS R 3,546,951

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•Connections might change as projects are moving from design into implementation phase.

Connection and Bulk Allocations for 2013/14

PROVINCE Total Allocation Eskom

allocations(R’ 000)

Munic allocation(R’ 000)

Adam allocation (R’000)

Eastern Cape 1 083 674 697 774 290 900 95 000

Free State 197 882 17 782 95 100 85 000

Gauteng 270 000 97 000 173 000 0

KwaZulu Natal 760 915 399 193 261 722 100 000

Limpopo 460 419 301 119 159 300 0

Mpumalanga 283 429 172 029 111 400 0

Northern Cape 94 270 17 170 57 100 20 000

North West 413 000 343 850 49 150 20 000

Western Cape 212 210 95 110 117 100 0

Total 3,775,799 2,141,027 1,314,772 320,000

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Bulk allocation 2013/14PROVINCE ESKOM MUNIC R’000

EC R 266,513,230 R 28,000,000

FS - R 27,000,000

GP R 291,042 R 41,000,000

KZN - R 26,000,000

LIM R 7,068,000 R 7,000,000

MP R 6,583,500 R 17,620,000

NW - R 25,000,000

NC - R 13,500,000

WC R 36,920,062 R 23,000,000

TOTAL R 317,375,834 R 208,120,000

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Adam allocation 2013/14 PROVINCE MUNICIPALITIES ALLOCATIONS

EC KING SEBATA DALINDYEBO 60,000,000

EC NELSON MANDELA 35,000,000

FS NGWATHE 20,000,000

FS MOQHAKA 20,000,000

FS NALA 20,000,000

FS MANGAUNG 25,000,000

KZN MSUNDUZI 100,000,000

NC SOL PLATJIE 20,000,000

NW TLOKWE 20,000,000

TOTAL 320,000,000

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Universal access challenge

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Universal access challenge

•Households without electricity: ~3.3 million (Informal 1.2 mil and formal 2.1 mil) •75 % in Eskom supply area and 25% in municipalities supply area.

Universal access challenge (cont.) • INEP established in 2001/02 - address backlogs of households in

line with Energy White Paper (1998) recommendations. • Newly built households to be electrified by the restructured

Electricity Distribution Industry (EDI) - due to serious inefficiencies in the EDI over the last 10 years, INEP had to address not only backlogs, but also newly built houses and informal households.

• Not only connections had to be funded, but also ‘back bone’ network infrastructure.

• In addition to the above challenges, escalating electrification costs and limited funding, as well as the high growth rate of houses (formal and informal), resulted in a serious thread to reach universal access in the country.

• Despite its successes to date, the electrification programme will fall short in meeting its target of electrifying 92% of formal households by 2014, as defined as backlogs in 2001/02. It is expected that 84% of all formal households and 78% of all households in the country will be electrified by 2014.

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Households electrified in South Africa • 2011 Census: ±12,24 mil households out of ± 14,45 mil households are

utilizing electricity as a lighting source; ± 85% of households have access to electricity for lighting purposes.

• Different types of households included into the total household figure (built on the same stand as the formal household):

• Houses/flats/rooms in backyard 423 000 • Informal dwellings in backyards (shacks in backyard) 713 000• Room/flatlet on a property or larger dwelling/servants quarters/granny flat

120 000Total 1,256 000

• Majority of these households (about 90% plus) are not metered, estimated to be ± 1.1 mil .

• Network designs were not done to accommodate these additional households, hence will have to be upgraded.

• These household does also not qualify for inclining bock tariff and FBE.• About 2.2 mil households according to Census 2011 stats are without

electricity, if the 1,1 mil households that are not metered (have not received electricity formally) been added, total figure of about 3,3 mil.

• In line with the INEP stats for households that are not formally electrify (metered), hence ±77% households have a metered supply.

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Universal access challenge (cont.)• If universal access to electricity by 2014 is not practical, what is

the most effective and realistic timeframe to reach universal access, given the various challenges in the electricity industry, raising cost of electrification, etc.?

• Hence a new approach to electrification is required - New Electrification Roadmap (Implementation plan) for South Africa was developed.

• In March 2012, DoE held an Electrification Indaba where all the relevant sector departments and stakeholders were invited to participate and agreed on the need for a new Electrification Roadmap.

• The Indaba resulted in a consultative working group process which the following relevent stakeholders were involved in defining the new Roadmap:

Eskom, DHS, DRDLR, DPE, SALGA, AMEU, CoGTA, MISA, NERSA, SANEDI, DBSA, National Planning Commision, National Treasury, MinMEC, NPC, PICC Secretariat, Commercial financial institutions and current non-grid concessionnaires.

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Universal Access is function of Electrification Technology options and funding

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Technology mix

(bas

e ca

se)

+R

1 b

illi

on

+R

2 b

illi

on

Ad

dit

ion

al f

un

din

g p

er y

ear

2031

2027

2037

Option 1All grid

100100

2022

Base case2028

Option 3(base case)

Option 2, but non-grid

within 3km

9090

2019

2023

2030

Option 4Option 3, but grid replaces

mini-grids

8787

2017

2020

2023

Option 2Most cost efficient

technology Option

7070

2017

2021

2026

Option 5Option 3, grid connection for

informal households

7878

2018

% of current un-electrified formal households to be connected to the grid

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Number of connections outstanding

Formal households

Informal households1

2012

3.4

2.2

1.2

Million connections

Connection rates required2 to meet…

At least 99% grid access by 2028

Universal access by 2025

▪ ~380,000 connections per year3

1 Informal settlements are defined as residential areas that do not comply with local authority requirements for conventional/formal townships

2 Beginning in the middle of 2013; includes informal settlements3 Ignores growth of new un-electrified households.

▪ Current ~220,000 grid connections per year3

Universal access vs Connection rate

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Provincial non-grid potential

Using these rules, it is expected to deploy around 300,000 solar home systems and reach universal access for formal

households in 2025South Africa

Time to electrify formal households

Total connections 2013 – 2025Million households

Grid

Non-grid

90%

10%

2025120251

84

73

19

28

16

37

4 26

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The highest potential for Non-grid is in KZN and Eastern CapeThe highest potential for Non-grid is in KZN and Eastern Cape

0.3

3.1

1 Assumes existing INEP annual funding and DoHS contribution of R2,000 per household for new RDP houses (40,000 houses per annum); assumes total of 50,000 new formal households per year from DoHS formalization process

Thousand households

New Household Electrification StrategyThe key aspects of the new Household Electrification Strategy :1.Re-setting universal access date to 2025 and defining universal access as 97% - full electrification is not possible due to growth and delays in the process of formalizing informal settlements. 2.Electrify about 3 million formal households via grid (90% of backlogs) and about 300,000 households with high-quality non-grid solar home systems to address current backlogs.3.Increased efficiency in planning and the delivery process will require Master Plan to ensure more connections and to be in line with PICC SIP progrmames.4.Current financial year will improve efficiency, especially wrt municipality’s delivery (last year increased connections by about 20 000), as well as to prepare the electricity industry for the increased connection rate.5.Additional funding will be required if universal access is to be reached by 2025. An additional R0.5 billion annually (nominal 2012 figure) top-up of existing allocations will be required from 2014/15 onwards. 6.Eskom’s to lead the development of the Master Plan.7.Municipalities to improve delivery and management of projects.

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Additional progress

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Eskom has progressed very well with addressing the so-called “island electrification” in KZN. 14 959 households identified falling into this category in 2011/12 –

10 186 been electrified (4773 outstanding) Master plan development – DoE in collaboration with Eskom. DBSA “front loading” process to fast tracked certain high backlog

Municipalities as part of INEP long term planning.

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Additional progress

Project Report DBSA Front Loading

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Municipality Province DBSA Loan Comment/Status

Mbizana EC R61 Million Approved, business case submitted to National Treasury

Umzimvubu EC R45 Million Approved, business case submitted to National Treasury

Matatiele EC R30 Million Approved, business case submitted to National Treasury

Mnguma EC R23 Million Approved, awaiting Council Resolution

Engcobo EC R30 Million The application is being appraised, developing a business case for the Municipality.

Intsika Yethu EC R38 Million Awaiting information from the municipality

Ntabankulu EC R35 Million Awaiting information from the municipality

Project Report DBSA Front Loading

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Municipality Province DBSA Loan Comment/Status

Ingquza Hill EC R35 Million Awaiting information from the municipality

Ndwedwe KZN R26,6 Million Under Administration

Abaqulusi KZN R23 Million Business plan not yet received from the municipality

Matubatuba KZN R45,8 Million Under administration

Msinga KZN R53,2 Million

The business plan is not aligned to the IDP. The municipality is in discussion with Eskom to sign the service level agreement.

Umzimkhulu KZN R17 Million Municipality to provide outstanding information

Mvoti KZN R90 Million Application received on the 22nd of May 2013

Project Report DBSA Front Loading

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Municipality Province DBSA Loan Comment/Status

Thulamela LP R90 Million Municipality will complete phase one of R90 million by July 2013. They are in a process of applying for phase two.

Greater Giyani LP R16 Million Municipality to provide Audited Financial Statements

Greater Tzaneen LP R50 Million Application is being processed

Polokwane LP R95 Million Application is being processed

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Thank you